South African President Ramaphosa addresses residents of Alexandra township in Johannesburg

CAPE TOWN – Investors beware of “Ramaphoria 2.0” if the ANC wins the elections again, as the structural reforms required to put the economy back on a sustainable growth path may take much more time to implement.

Business and consumer confidence levels surged when President Cyril Ramaphosa was appointed head of state early last year, but slowing economic growth, severe operational and financial problems at state-owned enterprises, corruption and the slow pace of reforms in government have seen confidence steadily wane since then.

BNP Paribas senior political analyst Nic Borain said at an S&P Global conference in Cape Town yesterday that Ramaphosa’s interventions had already improved governance at state-owned institutions.

But not much had been achieved on structural reforms such as reducing the cost of the public sector wage bill to the fiscus, which was an issue that could only be tackled slowly in South Africa.

Borain said capital markets already seemed to have factored in a high vote for the ANC and had translated that into a strengthening of the mandate for Ramaphosa to continue his reform programmes.

However, although he too believed the ANC would win the election, he did not believe this would automatically translate into growth over the next two to three years.

“I think the assumption is mispriced. I think the markets will be disappointed (after the elections),” he said.

Borain said a potential “upside surprise” after the election, if the ANC won, was that Ramaphosa would use his political capital after the election to build a “small, tight, technocratic” Cabinet, which would be “very favourably” received by capital markets.

He said very little polling had so far taken place on the election, but at least two polls suggested the ANC could win with between 55 to 60percent of the votes.

Hugo Pienaar, the chief economist at the Bureau of Economic Research, said if Ramaphosa emerged from the election in a position to accelerate economic and fiscal reforms we may well have a “Ramaphosa 2.0 play out”, but investors needed to be careful of what could be achieved in the short term.

Ramaphosa’s efforts to stamp out corruption were good for government, but would not create economic growth, he said.

“The hard stuff, such as tougher stance on some labour issues, that may take longer,” said Pienaar.

S&P Global Ratings sovereign analyst Gardner Rusike said a reform-minded and united majority win for the ANC would be good for the economic outlook, but more needed to be done when it came to policy implementation.